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A common strategy to reduce or eliminate Federal taxes on your estate when you die includes establishing a Credit Shelter Trust. Assets placed into the trust avoid estate taxes as they are considered to be “outside the estate” of the original owner.
Fortunately, Federal estate taxes only apply to those who have estates valued at over $12.9 million at death. Portability rules allow a married couple to double that exemption amount. With such high exemption amounts, most people will die without having to worry about paying Federal estate taxes even if they don’t have a Credit Shelter Trust in place when they die.
But there are some exceptions to the rule.
A recent article on Cory Wessman’s Wealth and Wisdom blog explains four situations in which Credit Shelter Trusts may still make sense for your estate plan. You can read about it here: Portability of Tax Exemptions.
Spoiler alert: one of the situations in which the Credit Shelter Trust makes sense is when you live in a state like Minnesota which taxes much smaller estates. If your household has a net worth of close to $3 million or more (counting your life insurance), talk to your financial advisor or estate planning attorney to see how you can reduce or eliminate your estate tax.
To discuss any of the topics in this blog or to learn more about how we can help you Cross The Bridge To A Confident Retirement, please contact me through my web site mikebranch.net, call me directly at 651-379-3935 or email me at mpbranch@focusfinancial.com.